INNATE PHARMA S.A. (Euronext Paris: IPH – ISIN: FR0010331421) (“Innate Pharma” or the “Company”), a French biotechnology company focused on discovering, developing and commercializing first-in-class therapeutic antibodies designed to harness the immune system for the treatment of oncology indications with significant unmet medical need, announced today the pricing of its initial public offering on the Nasdaq Global Select Market by way of a capital increase of 12,500,000 new ordinary shares, consisting of a public offering of 8,047,227 ordinary shares in the form of American Depositary Shares (“ADSs”), each representing one ordinary share (the “U.S. Offering”), and a concurrent private placement of 4,452,773 ordinary shares in Europe (including in France) and other countries outside of the United States (the “European Private Placement”, and, together with the U.S. Offering, the “Global Offering”). The aggregate gross proceeds amount to approximately $68.8 million, equivalent to approximately €62.1 million, before deduction of underwriting commissions and estimated expenses payable by the Company.
Citigroup Global Markets Inc., SVB Leerink LLC and Evercore Group L.L.C. are acting as joint bookrunners for the U.S. Offering and Citigroup Global Markets Limited is acting as global coordinator for the European Private Placement (together, the “Underwriters”). Namsen Capital acted as capital markets advisor to the Company.
Pricing of the Global Offering and Discount
The offering price was set at $5.50 per ADS and at €4.97 per ordinary share.
The offering price per ADS corresponds to the offering price of €4.97 per ordinary share based on the October 16, 2019 exchange ratio of €1.00 = $1.1065.
The offering price per ordinary share in euros (€4.97) represents a discount of 14.8% from the reference price determined by the Company pursuant to the 31st resolution of the Company's combined general shareholders' meeting held on May 22, 2019*.
Type of Global Offering - Capital increase without shareholders' preferential subscription rights reserved to a category of purchasers
The ADSs and the ordinary shares will be issued through a capital increase without shareholders’ preferential subscription rights reserved to a category of purchasers within the meaning of Article L.225-138 of the French Commercial Code (Code de commerce) and pursuant to the 31st and 32nd resolutions of the Company's combined general shareholders' meeting held on May 22, 2019.
The ADSs and ordinary shares offered in the Global Offering may only be purchased initially by industrial and commercial companies involved in the pharmaceutical/biotech sector or by investment companies, fund management companies or investment funds governed by French or foreign law or by any other legal person, including a trust, or natural person, investing in the pharmaceutical/biotech sector, that are qualified to invest in a private placement. In order to purchase ordinary shares, including ordinary shares in the form of ADSs in the Global Offering, potential investors were required to execute and provide the Underwriters an investor letter representing that they satisfy the foregoing investor criteria.
Option to Purchase Additional Shares
The Company has granted the Underwriters an option to purchase (the “Option”), for a 30-day period (until November 15, 2019), 1,875,000 additional ADSs, which represents 15% of the aggregate amount of ADSs and ordinary shares to be issued in the Global Offering.
In connection with the Global Offering, Citigroup Global Markets Inc., acting as stabilizing manager, may over-allot the securities or effect transactions with a view to supporting, stabilizing, or maintaining the market price of the securities at a level higher than which might otherwise prevail in the open market. However, there is no assurance that the stabilizing manager will take any stabilization action and, if begun, may be ended at any time without prior notice. Any stabilization action or over-allotment shall be carried out in accordance with all applicable rules and regulations and may be undertaken on the regulated market of Euronext Paris and/or the Nasdaq Global Select Market.
The 12,500,000 ordinary shares issued in the Global Offering (including ordinary shares in the form of ADSs) will represent a dilution of approximately 19.5% of the share capital of the Company. If the Underwriters exercise their Option in full, the dilution would increase to 22.4%.
The Global Offering benefited from the support of current significant shareholders of the Company, which together agreed to purchase an aggregate amount of approximately $22.7 million (€20.5 million) of ADSs and ordinary shares, representing approximately 33.0% of the Global Offering. Specifically, Bpifrance Participations, MedImmune Limited, an affiliate of AstraZeneca AB, and Novo Nordisk A/S participated in the Global Offering by agreeing to purchase approximately €9.9 million, €6.1 million and €4.5 million of ADSs or ordinary shares, respectively.
Terms and Conditions of the Securities to be Issued - Closing and delivery
The closing and delivery of the U.S. Offering and the European Private Placement are conditioned on each other and will occur simultaneously, on or about October 21, 2019.
All the securities sold in the Global Offering will be issued by the Company. The ADSs have been approved for listing on the Nasdaq Global Select Market and are expected to begin trading on October 17, 2019 under the ticker symbol “IPHA”. The Company's ordinary shares are listed on the regulated market of Euronext Paris under the ticker symbol “IPH”.
The ordinary shares sold in the European Private Placement and the ordinary shares underlying the ADSs sold in the U.S. Offering will be subject to an application for admission to trading on Euronext Paris (Compartment B) on the same trading line as the existing shares under the same ISIN code FR0010331421 and are expected to be admitted to trading on October 21, 2019.
The Company expects to request that Euronext Paris halt the trading of its ordinary shares effective as of the market opening of Euronext Paris on October 17, 2019, and resume trading at the market opening of Euronext Paris on October 18, 2019, in order to allow the confirmation of the allocations to investors and the commencement of trading of the ADSs on the Nasdaq Global Select Market.
Estimated Proceeds from the Global Offering - Reasons of the offering - Use of proceeds
The gross proceeds of the sale of 12,500,000 ordinary shares, including in the form of ADSs, in the Global Offering will be approximately $68.8 million (€62.1 million), assuming no exercise of the Underwriters’ Option to purchase additional ordinary shares. The Company estimates that the net proceeds of the Global Offering will be approximately $61.2 million (€55.3 million), after deducting approximately $4.8 million (€4.3 million) in underwriting commissions and approximately $2.8 million (€2.5 million) in offering expenses.
The principal purposes of the Global Offering are to increase the Company's financial flexibility in order to advance its proprietary and partnered pipeline and build out its commercial capabilities.
The Company expects to use the net proceeds from the Global Offering, together with its cash, cash equivalents, short-term investments and non-current financial assets (in aggregate) as follows:
- Approximately $30.0 million to advance the clinical development of the Company’s lead product candidate, monalizumab, in collaboration with AstraZeneca, which is currently being evaluated for the treatment of patients with R/M SCCHN and in patients with advanced solid tumors, including CRC, to the end of the current Phase II program;
- Approximately $55.0 million to advance the Phase II clinical development of IPH4102 through the first activity data for patients with Sézary syndrome, MF and PTCL;
- Approximately $40.0 million to advance the Phase I/II clinical development of IPH5401 through the detection of activity signals in patients with solid tumors, including NSCLC, HCC and potentially other tumor types, as well as potentially in patients with inflammation disorders;
- Approximately $30.0 million to build the Company’s commercial capabilities for Lumoxiti in the United States and, if approved, in the European Union;
- Approximately $55.0 million to expand and advance the Company’s preclinical pipeline, including transitioning IPH5301 into clinical development; and
- The remainder, if any (including proceeds received pursuant to the underwriters’ Option to purchase additional ADSs or ordinary shares, if exercised), for general corporate purposes.
The Company may also use a portion of the net proceeds to in-license, acquire or invest in complementary technologies, products, businesses or assets, either alone or in collaboration with a partner.
As of June 30, 2019, the Company had cash, cash equivalents, short-term investments and non-current financial assets of €200.3 million. The Company believes its cash, cash equivalents, short-term investments and non-current financial assets, together with the net proceeds of the Global Offering and its cash flow from operations, will be sufficient to fund its operations until the end of 2021.
The Global Offering is subject to an underwriting agreement covering the entirety of the Global Offering. The underwriting agreement was entered into on October 16, 2019 in connection with the determination of the Global Offering Price.
The underwriting agreement does not constitute a "garantie de bonne fin" within the meaning of Article L. 225-145 of the French Commercial Code (Code de commerce).
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* Volume-weighted average (in the central order book and excluding off-market blocks) of the closing prices of the Company's ordinary shares on Euronext Paris during the last five trading days preceding the determination of the offering price on October 16, 2019, i.e. on October 10, 11, 14, 15 and 16, 2019.